Estate Planning: A Continuous Process

Chris Schultz 2016Estate planning is a continuous process and estate plan documents should be reviewed at least every decade and upon any major changes in lifestyle or family structure.

A basic estate plan includes a Will, a Medical Power of Attorney, and a Durable General Power of Attorney for financial matters.

A Will addresses the distribution of assets, paying debts and taxes, and providing guardians and conservators for any minor children.

A Medical Power of Attorney designates the individual to be consulted for medical treatment issues in the event a person is not capable of making medical decisions for themselves.  A Medical Power of Attorney can also contain specific instructions for personal preferences, such as anatomical gifts, life sustaining treatment, or treatment consistent with your religious beliefs.

A Durable General Power of Attorney for financial matters allows a person to name an agent to make financial and legal decisions, which is important in the event a person become incapacitated, temporarily or permanently, or is not available to perform certain regular tasks for banking, bill paying, etc.

Additionally, estate plans often include a Revocable Living Trust (Trust).

A Trust is created for several purposes, including planning for potential tax issues, controlling the timing of distributions or setting contingencies for distributions, and avoiding probate.  A Will is administered through the probate court addressing the assets that are titled in a person’s name upon their death.  A proper Trust can avoid the time consuming and expensive probate process.

Without proper instruction to a probate court through a Will or to a successor trustee through a Trust, the assets will be distributed in accordance with a statutory scheme that essentially follows a genealogical rule of inheritance.  Simply, the assets would first go to parents, if surviving.  If not, the assets would be distributed to siblings in equal proportions.

Those who are not married and do not have children may think they do not need an estate plan.  This is not true, especially if they plan to donate assets to a charity, such as a church, college or other qualified charitable organization.  Without an estate plan, assets would be distributed according to a statutory plan with the beneficiaries being immediate family members.

Blended families where one or both spouses have children from previous relationships, create additional reasons to prepare an estate plan.  Following the statutory genealogical rule of inheritance is not going to be the result intended.  Consideration has to be given to making special provisions and allowances for children from prior relationships, former spouses, and possibly a separate allocation of assets.

Complicating matters further are individuals who live with a significant other and may or may not have children.  In almost every circumstance, without an estate plan, your intended disposition of assets will not be consistent with the actual distribution of assets.  An estate plan is necessary in order to guide a probate court or a successor trustee with the proper allocation and distribution of assets.

Estate planning for the elderly becomes complex due to concerns for long-term care and the potential need for Medicaid.  Medicaid is a need-based program and Medicaid planning is needed in order to qualify for eligibility.  More and more reviews and reports are being published that recommend purchasing long-term care insurance.  In most circumstances, it appears this is a more viable financial option than planning for Medicaid eligibility.  Medicaid planning is a method organizing the assets and income into categories of countable or non-countable assets.  Non-countable assets are assets that are not counted in determining your eligibility for Medicaid benefits.  Proper Medicaid planning can assist in sheltering your countable assets, preserving assets to pass to your heirs, and providing for the care and financial support of your spouse.

Estate planning has become more complicated over the years, however the estate plan itself does not have to be complex.  Attorneys in our Estate Planning and Elder Law practice group are available to assist in creating or updating your estate plan to ensure the plan benefits you and your loved ones.

Christopher G. Schultz is a partner in our Livonia office where he concentrates his practice on representing businesses in many areas of the law. Additionally, he assists clients with estate and elder law planning. He may be reached at (734) 261-2400 or cschultz@cmda-law.com.